Deploying Microsoft Office 365 ProPlus - Important Licensing Information Before You Start

Several of my clients are starting their implementation of Microsoft Office 365 ProPlus and I'm seeing a key misperception that could lead to expensive license compliance issues down the road.

Microsoft Office 365 ProPlus is licensed per user (Yeah! Something many of us have wanted for years) but Microsoft Office Professional Plus 2016 (or 2013, 2010, 2007, etc) is licensed per device. 

The change to "per user" licensing is one of the key reasons many organizations have licensed the Microsoft Office 365 ProPlus, but by using the incorrect installation bits a company can quickly become out of compliance.

These are two different products - they may contain the same feature set but just like you cannot install Microsoft Office Standard when what you own is Microsoft Office Professional, you also cannot install Microsoft Office Professional Plus 2016 when what you own is Microsoft Office 365 ProPlus!

In order to maintain compliance (and benefit from the "per user" licensing) you need to make sure that any deployments of Microsoft Office 365 ProPlus are done with the Office 365 bits, not the volume (or otherwise provided) licensing bits for Microsoft Office Professional Plus.  While years ago there was a short-term exemption to this requirement that exemption has since expired and if you install with Microsoft Office Professional Plus bits then you are installing a device based license.

This information used to be spelled out in the Microsoft licensing briefs but in my latest search I could no longer find reference to it, however; the thing to remember about Microsoft licensing is that they only tell you what you can do - not what you cannot do so the absence of this clarification does not mean they've changed the requirement. This Microsoft TechNet article on "Getting started guide for deploying Office 365 ProPlus" provides some guidance to consider.

While I have not seen Microsoft actively auditing on this yet, you should expect that in the not too distant future it will probably become a compliance item so if you are planning your rollout now, it will pay to do it under the correct installation media.  Also,  your Microsoft Account team is presently financially interested in your Office 365 usage, something that cannot be measured if you are using the Microsoft Office Professional Plus bits.

Example of impact: A user has 3 dedicated devices with Microsoft Office installed (workstation, home, laptop).

• If all of these are installed using the Office 365 ProPlus bits then the company only needs to license the user for some form of Office 365 ProPlus. 
• However; if each of these is installed with the Microsoft Office Professional Plus bits then each install would have to have it's own license requiring the procurement of 2-3 licenses (2 if the laptop could be covered under Portable Use Rights but that is dependent upon how the license for the workstation was acquired).

So, in summary - do not use your Microsoft volume licensing MSI's for Office Professional Plus to deploy you Office 365 ProPlus.  It could end up costing your organization unnecessarily!

As a side note, for those organizations getting ready to deploy Microsoft Office 365 ProPlus 2016 please be aware that there is currently an issue with volume licensed versions of Microsoft Visio 2016 or Microsoft Project 2016 installed on the same computer (as well as 2013 versions of Visio Pro for Office 365 or Project Pro 365). For more details please refer to this Microsoft TechNet article (scroll down to the topic "Visio and Project versions that can be installed on the same computer with Office 365 ProPlus").

Update January 27, 2016 - I have been informed by Microsoft that there is a resolution planned in February 2016 for the above point about volume licensed versions of Visio 2016 and Project 2016. It is planned to come in the form of a "Click to Run Compatible Bits" (C2R-P) for the volume licensed Visio and Project. Keep your eyes open for these updated bits.

Microsoft Next Generation Licensing Agreement (NGVL and MPSA)

A light buzz is going around the Microsoft licensing world about the NGVL (Microsoft Next Generation Volume Licensing) and a new agreement called MPSA (Microsoft Product and Services Agreement). I mention both terms because many of the resellers I've talked to have often known that NGVL was available but thought the MPSA wasn't or vice versa.  This confusion should rapidly diminish but for now, find that it helps for clarification.

The NGVL and MPSA has been available for some time and the beauty of it has been that unlike the Microsoft Select Plus Agreement it allows for online subscriptions.  The bad part was that it didn't allow for Software Assurance purchases.

As of September 2, 2014 Microsoft now allows for purchases of Software Assurance under the MPSA.

It has been a long time since Microsoft has really created a new licensing agreement (the Microsoft Select Plus was in my opinion more of a re-write of the Microsoft Select Agreement) and frankly their offerings have changed substantially during that time so the old agreements were having to be "massaged" to work with current offerings.

Basically the MPSA has many pluses, but the contract language also leaves me very uncomfortable around certain areas - so if you're looking to update your Microsoft agreements take a good look at this agreement but be sure to read the contract carefully and negotiate terms you can actually live with.

The MPSA is designed to cover all products you buy from Microsoft; perpetual licenses, software assurance, subscriptions and services.  That's great and can really provide you with streamlined management but the problem is whenever you lump disparate products together the contract language can get messy.

For example, if you think of your classic "services agreement" and compare that to your "software licensing agreement" there are many things you will accept for packaged software (such as warranty) that doesn't fit what you would require from your consulting services agreement.  However; in this contract they are the same (but they did provide a way around it...you just have to make sure you're aware of it and follow through on it when you're executing the work orders).

Audit clauses have also been updated - this is a subtle change that has happened over the years in the Microsoft Master (Business or Services) Agreement taking out the wording that required them to use a major auditing firm in performing an audit...in my opinion this lays the ground for them to be able to use any Microsoft Partner to perform audits, I don't necessarily feel that change is advantageous to companies.

I'll be going into further details in a later posting but wanted to give an initial "heads up" for anyone thinking of either signing an MPSA or who's in the middle of determining their Microsoft licensing strategy and were unaware that there is a new player on the field that might offer them substantial benefits.

As always, if you are looking at your Microsoft licensing strategy or are considering signing a new agreement with Microsoft (or are being audited under an existing one) it's a good time to get some expert help from an independent third party. I live and breathe Microsoft licensing (I know...but what can I say - we love puzzles!) and am happy to help - contact me to find out how we can help you.

Renewing Microsoft Software Assurance - Know the Implications

Upgrade rights are included but so are updated rule requirements

 A frequently misunderstood area of Microsoft licensing is knowing what rules apply when you are utilizing downgrade rights (the right to install an earlier version of the product under a newer license).

The version purchased determines the use rights regardless of what version is installed.

However; this gets a little more confusing for companies who maintain Software Assurance on their products.  For example if a customer bought a license for Microsoft SQL Server Enterprise in July of 2011 with Software Assurance (we’ll assume 3 full years of Software Assurance) they would have bought the rights to Microsoft SQL Server 2008R2 Enterprise (either per server or per processor) and enjoyed upgrade rights to later versions of that product. If they choose to run 2008R2 (or an older edition), then the 2008R2 rules would apply. If they choose to upgrade to 2012 then the 2012 rules would apply.

In July 2014 that customer will need to decide if they are going to renew Software Assurance.  As soon as they renew Software Assurance they are in essence refreshing the license version of all products with Software Assurance to the current edition.  Therefore, they would no longer get to leverage the rules from 2008R2 they would now have to follow the rules for Microsoft SQL Server 2014.

There are both advantages and disadvantages for customers but the important thing for customers to remember is that renewing Software Assurance has a licensing impact which should be considered so that you are not accidentally put in a position of being non-compliant.

Just one more thing to consider in your due diligence when determining what products to renew Software Assurance on at your next renewal.  Let us know if we can help!

Software Audits - Be Afraid...Be Very Afraid!

OK, so I know the title is a bit "doom and gloom" - but frankly I've seen too many companies over the years get seriously bitten during software audits because they didn't have a healthy respect for the risk when they first accepted the audit (and for the sake of this article...I'm calling it an audit any time you share your installation data with a publisher or anyone representing the publisher).

First, I do not recommend going through one alone. That would be like going to an IRS audit alone - there are far too many obscure rules that can come back to haunt you. Get professional help before it starts and keep that help around through completion...very few rules are "black and white" and you need an advocate on your side who fully understands the rules and can balance the publisher's interpretation of use.

Here are a couple of things to know before heading into an audit:

1. Not all audits are the same - know when you have the right to refuse or limit and when you've already waived those rights.
2. Make sure the scope is clearly defined - is it all subsidiaries, all geographies, etc.
3. Require a project specific non-disclosure agreement (NDA) be in place with any third-party gaining access to your information and follow up at the end of the audit to require disposal of the records.
4. Understand under what circumstances you'll be billed for the cost of the audit.
5. Ensure that the audit is being conducted under the rules of your active agreement with the publisher and the pertinent product use rights for the products in use.

There are many more, but this is a start.  The ITAM Review has a number of useful articles on this topic that you should consider reading as well.

Pitfalls to be aware of to avoid audit problems:

The best possible situation is to avoid an audit altogether.  While this is becoming more and more difficult as publishers have realized that audits are a profitable activity that helps them meet revenue goals (most of the heads of software publisher compliance groups have revenue goals much the same as a sales group), there are steps you can take to reduce your chances of an audit.

1. Regularly conduct your own audit. Know what you own, what and how you are using it. If contacted for an audit, be sure that your executive handling the conversation can speak knowingly and authoratatively on current usage by product and the timeliness of that data.  Software publishers don't want to throw their money away on an audit that is going to produce no licensing revenue. The more they feel that you already have things under control the less likely they are to require a full onsite audit.
2. Watch your external access, make sure you are appropriately licensing clients, vendors and partners for their access to your computing resources.
• If your customers are using your computing resources, make sure that you are covering that usage under the appropriate licensing agreement.  Most publishers have service provider agreements (Microsoft's SPLA or VMWare's VSPP program being two of the most common) allowing for you to host their products for use by others - there is a lot of gray area in determining when you need to license under these versus when you can use perpetual licenses so make sure you have a professional help you make this determination.
• Licensing is typically entity specific. While everyone in my organization is licensed to use a Microsoft Windows 2012 server within my organization that licensing does not cover us for when we access a client's organization.
• There are expensive ways of handling this and less expensive ways - having licensing advice when you're setting up access can help you avoid unnecessary costs.
3. Minimize OEM and non-volume purchases. Frankly, publishers regularly mine their entitlements data on clients to determine inconsistencies for compliance issues.  If a publisher can't see a full picture of your purchases it can increase the chances of an audit.
4. Keep your purchasing records. If you are still using the software (or it's successor if that successors licensing is based upon the original purchase), then you need to have ready access to your proof of purchase. Consider for example Attachmate the owners of some (current and) legacy emulation software.  They audit on a regular basis - can you demonstrate that you purchased the 50 copies of KEA or myEXTRA! that you still have running in your organization?  If not, the cost to buy new licenses can include interest based upon when the software was originally released.
5. Pay attention to country of usage rules. Most publishers have some restriction on using software in a  country other than the one purchased.  Autodesk, VMWare and Microsoft (under the Open licensing program) all restrict usage across geographical boundaries.
6. Understand transferability rules of licenses during mergers, acquisitions and divestitures. For example, Autodesk states that their licenses are typically not transferable and have the right to refuse a request for transfer, if they do accept the transfer they can require that subscription costs be added to the license.

Already in an audit:
Regardless of what stage the audit is in, get help.  Make sure you have someone working as your advocate that has experience in software audits, strong knowledge of the publishers current and historical agreements and product use rights and the frankness to give you an accurate picture of where you stand (this is not the time your management team wants anything sugar coated...they need to know the reality so they can prepare).

Double check everything the auditors present to you - math errors and mis-interpretation of product use rights and licensing terms are frighteningly common.

Microsoft Windows Server 2012 - Licensing Changes

While much of the focus this year has been on Microsoft's planned release of Windows 8, Microsoft Windows Server also has a planned release this year.  Microsoft Windows Server 2012 is slated for general availability in September and has some significant licensing changes planned to accompany the release.

Even though you may have no plans to move to Windows Server 2012 at release, this will impact all Windows Server purchases made after General Release.

 

Summary of planned changes:

1. All server licensing is changing to the per Processor model (no more “per server” licensing)
2. They are eliminating the “Enterprise” edition (the only difference between the remaining editions of Standard or Datacenter will be how they license virtual OSEs…functionality between editions will be exactly the same).
3. Each license will cover 2 processors on the same device. Existing licenses with Software Assurance will convert as follows:
• Microsoft Windows Server Datacenter – 2 licenses will convert to a single Datacenter license
• Microsoft Windows Server Enterprise – 1 license will convert to two Standard licenses
• Microsoft Windows Server Standard – 1 license will convert to one Standard license
4. Standard will now include the right for 1 physical or 2 virtual OSE’s per 2 processor box

Timing of release has not yet been disclosed (I’m betting September) – I recommend you analyze your environment and determine if you want to execute a purchase prior to general release so as to minimize the impact by maximizing the conversion ratios.

 

As always, if you need help or simply want to discuss this further let me know – I know Microsoft licensing (particularly when it changes) can be confusing…I’m happy to help explain it.

 

Please note, these changes are “planned” – by the time General Release occurs there could be more changes as the licensing terms are not set until release.

Software Audits - Beware of the Unknown!

While most of our business is focused on helping companies optimize their licensing and avoid compliance risks there are times a company comes to us when they are in some stage of being audited (whether it's called an audit or not for purposes of this posting I will refer to it as an audit anytime a third party is reviewing your licensing not at your behest).  We come across a number of areas that "surprise" customers to find out it's a compliance issue.

Take a look at the following - if any of them apply to your company, take steps to resolve these:

• Own one edition but a different edition is installed.  Do you own Microsoft Office Professional but have Microsoft Office Standard installed?  If so, you are out of compliance (and no, don't count on them to look the other way). 
• Changing the hardware that you run your Oracle database on without checking to see what it does to your core factor in determining processor licenses required. Did you move to a Sparc 4 from a Sparc 3? You just doubled your core factor...Oracle US License Agreements
• Not understanding the minimum number of users that need to be licensed (contractual requirement versus actual usage). What did that (above mentioned) increase in processors just do to the number of users you're required to license?
• Server mobility in a virtual environment. For example, did you reassign your Microsoft Windows Server Standard licenses to your virtual environment? That's fine (assuming they weren't OEM licenses) as long as you are not using VMWare's V-Motion (or similar technology).  You can only reassign licenses once every 90 days in the Microsoft server operating system world - you might accidentally be drastically increasing your licensing needs by "harvesting" that Standard license versus appropriately licensing the virtual environment.
• Did you turn on enterprise functionality in your Microsoft SharePoint Server? If so, are other instances of SharePoint inheriting that enterprise functionality without your knowing it?  The enterprise functionality in Microsoft Sharepoint requires a Microsoft Sharepoint Enterprise CAL (client access license, this CAL is also contained in the Microsoft Enterprise CAL Suite).
• Do you have Mac's in your environment? Are they accessing a Microsoft Windows OS? How are you licensing that?
• Are you on an Enterprise Agreement (Adobe, Microsoft, Oracle, etc) and not including all devices in your environment? Check your agreements, unless it specifically allows you to exclude something these agreements typically require you to license all devices - read your fine print!
• Re-imaging devices using the wrong media. The quickest way to get out of compliance in a material way is to have the wrong media loaded to your image. Make sure this is in alignment and that a change control process is followed for any changes to the image including a licensing review.
• Are you assuming downgrade rights? For example, most Attachmate products do not have downgrade rights unless you have maintenance. Don't assume this right.

If you are asked (or told) that someone will be reviewing your licensing - get help before it starts. This is not the time to rely on your internal team unless they are licensing experts and stay current on all the publishers in your environment.

The ITAM Review has a great article series on the topic of "What REALLY Happens During an Audit", I recommend reading it whether you're going through one or just looking for more information.